Cisco Continues Layoffs
About 1% of global workforce affected
Cisco Systems (CSCO) on Thursday continued trimming its workforce at its San Jose, CA, headquarters. Sources close to the company say between 600 and 700 employees at the networking giant received layoff notices. “This limited restructuring is part of our ongoing, targeted realignment of resources and was previously discussed on our fiscal second and third quarter 2009 earnings calls,” a statement issued by Cisco reads. Like just about every company, Cisco has seen its sales decline in the face of the global recession.
With more than 66,000 employees worldwide, Thursday’s cuts comprise about 1% of Cisco's workforce. The cuts are the latest in cost-cutting measures being implemented at Cisco worldwide. During the company’s Q3 earnings call, Cisco CEO John Chambers said job cuts were likely to be closer to the high side of the 1,500 to 2,000 the company previously announced. Still, Chambers does not view even 2,000 lost jobs as a mass layoff.
"My own view is that if you have to do a layoff, and we try everything possible to avoid them, it needs to be of critical mass to justify the loss of business momentum, impact on employees and disruption in key projects,” Chambers said during the Q2 earnings call. “Being very transparent, the definition of a company-wide layoff to me is at least 10% of your workforce. In very direct terms, we are not going to consider a layoff at this point in time. And while there are no guarantees, we think the odds are reasonable that if we execute effectively as outlined in this call, that we may be able to avoid large downsizing events."
Chambers is likely to update the company’s layoff plan during its fourth quarter earnings call in August. Cisco stock traded up almost 2% for the day.
I am not sure if outsourcing is a bigger trouble for Silicon Valley or the widespread bribery and corruption involved in hiring full time and contract employees in various major companies including Cisco. The managers of Cisco, Intel, Wells Fargo, Oracle etc. have become so bold that now I hear from many head hunters and contract companies that even before a job posting/contract task order come out managers start calling their preferred vendors and start negotiating commissions with these vendors.
I am surprised that how can these companies not notice 80% plus of their managers having consulting firms owned by their wives or relatives and channeling these contractors or permanent hires thru these companies.
How can the silicon valley companies expect to maintain a lead in cutting edge technologies if they continue to hire 2nd rate employees/contract workers thru these bribery schemes.
Wake up before its too late.
Also to put things in perspective, one of the reasons why America is successful. Look at the list carefully and see if you find familiar companies, technologies:
Charles,
Firstly, I think you should understand the ramifications of outsourcing. The impacts of outsourcing is increasing profits for the corporation, so inturn my friend, it has helped the US economy and not affected it adversely. Next time you see job cuts, point fingers at your American corporation and not the brain-power in India. Also think about this, what if every country in the world will boycott american companies on their soil because american companies will now only hire American nationals. What would happen then? We're living in a global economy..survival of the fittest. If you can't catch-up then just get out of the race.
Also, if you read reports, the major contributors of the Global pollution till date has been America. It's only now that after the Americans have made a hole in the ozone, they will point fingers at developing economies who are trying to build their country. If America cares about the Global warming, they'll facilitate the transfer of clean technologies to the world instead of making a mess and then pointing fingers.
Furthermore, if Ford was a more reliable brand name than Honda or Toyotas then Ford, GM etc wouldn't be in the Red as they are today. If you cannot keep up with the global economy I guess you got to just shut-up and watch how other countries will diminish the super-power arrogance of America.
Middle,
How many of those Hondas and Toyotas were built in US-based factories and workers?… How many Fords are built in Canada or Mexico? The reality is quite a bit more complex than that.
Indian,
A great deal more than 2% of Cisco's workforce is in India. Tell the several hundred of New England-based Cisco employees that moving their jobs to India won't hurt their economy. Now multiply that by all the companies moving jobs out of the US – still not enough to effect the US economy? You don't think that even the threat of moving jobs doesn't cut salary pressures, instigate employment insecurity, cause folks to work even more hours to make sure their job is secure?…
And BTW, have you driven any of the Ford hyprids lately?…
My group was laid off completely with 130+ directly impacted after we won the Cisco corporate quality award 2008. The project was shipped to India and some of us had to stay behind a few months to train them.
This is the same story happened when I was working with Nortel, if anybody still remember Nortel. I was very impressed with some of the resumes that we reviewed. For example, one guy has to be a least 240 years old if he did all the work shown in the resume. Another 2 persons has over 20 years experiences of JAVA and SIP.
Our engineers expressed our concerns of these issues but the management was fully convinced it was going to work, so let see!
Since I left, the latest story I heard was some of the Indian engineers can not make the deliveribles, they just quit and moved to another Indian companies. Unlike US employees, there is no (long term) commitment for their employers.
Just a side note, I used to buy only Dell computers for home because of Michael Dell valued customer services as no. 1 priority. Every since Dell moved most of its services to India, I stopped buying Dell. Unfortunately with one that I still have warranty left, I still have to deal with them from time to time. The latest experience was without doing anything, the customer support guy already determined it was a software issue so Dell is not responsible. If I need someone from Dell to take a look, if is going to cost me over $200 to get it done.
So my 2 cents, you think you save by ship abroad. The truth is not only you are losing money, you also lost your long-term customers.
To "SW Engineer, San Jose, CA"
You could'nt be more correct. I have similar first hand experiences. My peers (Indian managers) would suggest not telling the client about bugs and delays in delivery. There was a lot of pressure to cover up for offshore shoddy work and delays. If I did not co-operate, these guys would gang up against me and tell our superiors that I am not a team player and am making offshore look bad.
we have to regulate outsourcing period. jobs are lost which takes away money for families, tax for the gov., adds to unemployment. indians keep saying its good for the us all while pocketing our money and saying how dumb we are. the future is not bright if we let this continue. imagine 10yrs from now where all your tax, legal, claims, IT, education services all going thru IT. unlike any other jobs, BPO and IT takes your personal information, how great is that? we are slowly being sucked dry and there's no recourse for reverse discrimination. stop the india outsourcing! go programmer's guild! go Norman! Go Newt!
To "N.S. San Jose",
Your arguments are based on assumptions thare are false.
One, you assume that the Indian SW Eng. is doing the same level of quality work for 1/3rd the salary of an American SW Eng.
I've worked at three companies so far that have had Engineering offices in India (Pune, Hyderabad, Bangalore). NONE of these companies' Indian offices had engineers that were as good as the engineers in the American offices. I even worked at an Indian office for a month. Their work ethic and communications left a lot to be desired. The problems were the same – you can't work concurrently on the same project with the Indian office because of the time difference. They have a tendency to hide problems or spin them so you're not aware of the problems. They missed deadlines or delivered a product that didn't work or failed the QA cycle, even though they claimed that all functionalities were finished and fully tested.
Mind you, this is my experience in three different companies. The only thing that they succeeded on were sustaining mode projects that weren't critical for the company.
The SW Engineer in India is not equivalent to a SW Engineer in America, even if he's ethnically Indian. The only advantage is that his salary is 1/3rd the salary of Americans, plus you don't have so many payroll taxes for employees of the Indian office.
Two, if the US company doesn't hire the engineer in India, he will go work for a competitor? Perhaps if Cisco doesn't hire him in India, he will work for the Indian office of Juniper Networks. But will he work for the Indian Cisco or Google or Microsoft? Of course not, because they don't exist. Name an Indian tech company, formed in India by Indians. The only ones are Tata, Satyam, and Wipro, outsourcing consultants, not companies that innovated and productized an idea.
There's a reason why there aren't any SAPs, Microsofts, or Googles being formed in India, even with the supposed large number of skilled talent that India has.
Here's a story – we had to ship some servers to India for them to use for development and testing. The servers got stuck in Indian customs. We had to bribe the customs agents to have them release the servers instead of being "quarantined" for another month.
Corruption in India is rampant. The sense of "rule of law" is nothing close to what we have in the US. Therefore, unless the Indian culture changes, I am not afraid of the potential for Indian companies to rise up and take companies like Cisco, Microsoft, or Google out. Won't happen, not with their lack of infrastructure and level of corruption.
And BTW, I am not a native born American. I immigrated here too. But I am just amazed at how people here allow their politicians and company leaders to export their jobs while taking advantage of America's opportunities. Other countries protect their workers. Even India's government forced Indian airlines to fire foreign pilots ahead of Indian pilots. Yet, if the US does something similar, we are protectionist?
Steve Ballmer threatens to move Microsoft to India if H1B visa laws are tightened. Well, I dare him to do so. See how much more buggy their SW will become, or how slower their release cycles will become. It will result in a death spiral for Microsoft and Ballmer knows it.
To "John Doe, Bay Area, CA"
The fact that you state you will be arriving to the US, but still signoff as someone sitting in CA, reeks of your double standards.
Many H1Bs and L1s, live as sardines packed (4-5 people) in a 1BR apt, commute to work in a shared car, have family (wife and kids) back home, thus keeping their expenses to the minimum. They lead a nomadic life, arrive to the US with 2 pieces of baggage.
Their companies pay them an "allowance" (not salary) in the US and still pay them their base salary in the home country. These companies expolit every loophole to beat all the different taxes payable to the IRS.
So you Mr. John Doe, stating your contribution to the overall economy is nothing but BS.
I would still prefer paying all my taxes when due, buying locally and seeing to it that the hand that feeds me is forever protected.
In many ways it makes sense to outsource certain jobs to other countries. The reasons are many. Yes, some are purely economic but some are geographical.
This should be a global society where we all help each other.
I just don't understand the animosity, and think that people here in the US should figure out how to help themselves instead of expecting someone else to provide them with a parachute.
Outsourcing of IT and other engineering functions is happening now faster to China than anywhere else as I am told. The notion that somehow India and other countries where US jobs are exported is justified by the relatively tiny amount of products that are imported is ridiculous (the trade deficit shows that clearly).
In 2004 a senior member of India's Trade Ministry made a statement that sums up the matter …. "The money spent in George W. Bush's election was the best investment we ever made".
With that said, the problem is hardly all with one man (especially one with less intelligence than a house plant) but with all elected officials selling their soul to be elected to office.
Proper disclosure – I am not an American. Hopefully, I will soon have an H1B and work in America for a couple of years. I am not Indian either.
My take on this is that if it weren't for work shifted to India, I'd expect an iPhone would have cost double, and Verizon services would have doubled in cost again. Are you willing to pay the price Mr. "Frustrated in MA"? or are you too trying to have your cake an eat it too?
On my personal situation, it seems to me that I would be coming to the US, paying lots of money on flights, shipment, housing, furnishing, taxes and such, while after two years, returning to my home land, without ever being a burden on the social/health care system. Seems to me America is gaining quite a lot from my short term there.
And lastly, no, you can't really find this many american engineers. The market demands them in the tens of thousands. India generates so many more engineers than the US. Skilled people in the US seem to prefer business schools to engineering work. I have a hard time finding Americans in US based companies in the US (Silicon Valley). I can't imagine any benefit to an employer to work through the hassle of bringing a foreigner to the US rather than employing an American worker if they have the same skills. There must be something different with their skill sets.
How come India is blamed for all the layoffs, when manufacturing is all done in China ? How many jobs are there in IT Vs Manufacturing, that Indians get blamed for outsourcing ? if you want to boycott oursourcing, boycott call products not made in the US.. you cant survive even an hour.
If you want to bring back the jobs to the US, bring it back from China. The jobs gone to India us waaay lesser than Jobs gone to China
If I had a dollar for every American professional who complains about outsourcing… yet drives a Toyota or Honda (and has been bashing GM for 20 years).. Id be quite wealthy!
Americans have been voting for years that they love outsourcing. They have been voting with their dollars with Toyota, with Walmart, with so many things. Now, they finally lose their cushy 6 figure office jobs and THEN they complain! Oh the irony.
We made these conpanies – they need it to give us back! I keep hearing brand name companies – we are giving back to the local people by donating food, clothing, volunteering employees – this is straight 'alms' to the local community. The local community which helped these companies grow from Zero revenue to mllions and some of them billions need no 'alms' – they need jobs.
This is not about 'outsourcing' – it is about giving it back.
And people! stop protesting for other countries like tibet/Iran/Afghanistan – start worrying your selves and start protesting for your own!
The root cause of the problem in US now is not the 'outsourcing'. But their own fund managers. Few people with few billions of dollars made entire population of US to pay 4.00 USD per gallon of gas. That money go into the hands of people who nurture terrorism around the world.
And then the financial instruments, mortgage securities!!! Innovations in America changed the world, this time too there is a change but undesirable one.
If Americans save 25% of the money spent on foreign goods, it would help to create local jobs. Goods from China/Taiwan/Japan killed the local manufacturers or killing them.
I don't really know whether OUTSOURCING jobs to India has any real impact, it might be, but not enough to cause deep recession or depression. But India is also market to American products(not just consumer goods, from Burgers to Boeing 737, F16). It is a win-win situation. In real terms, only 2% of Cisco's workforce is in India, i.e., 2% of workforce cut in US can fund to increase it's headcount by 7%. Is this serious enough to bring down US economy ?
The consumer-centric approach of US economy is not really working well for US. US flourished as long as innovations continued. Now the rate of innovation is slowing down, it is pinching people. Americans should become conscious and spend atleast 60% of their spending on American goods. And save money, not live on credit.
Believe me, I am looking upto US to free the world from the clutches of fossil fuels which deteriorates the environment, cause health issues etc.,
Honda motors already has hybrid version of Civic, but what is Ford or GM doing ? They just started working on it…they miserably failed to foresee the future…
Well…Globalization and its consequences.
USA, Stop creating crazy derivate products and Stop gambling in the financial sector.
Fix your health care system. Get rid of "Health insurance". The most powerful country on earth cant provide health care for its citizens ?
Invest in science and technology and be the Innovation engine you are known to be.
Ok.. lets get one thing straight in this "outsourcing" discussion. The people who are doing the "outsourced" work in India already exist. They do not work for free.. they work for salaries which are lower than American salaries, but higher than their alternative opportunity. So far, nothing wrong with that.. they are simply earning a living doing something that American workers do for more money.
Now, the only question for a US company is this: I have an opportunity to hire an Indian software engineer for one third of the cost of a US software engineer. This would increase my profits and make my shareholders very happy. But it would put some US software engineers out of work.. (which is also a substantial negative, no doubt).
However, the "choice" above evaporates when you go down the line one more layer. By the US company not hiring the Indian software engineer, the guy does not disappear. Instead, he will be on the market for the nearest competitor of the company to hire. Now lets say that all software companies refuse to hire this guy (maybe under pressure of protectionist policy.. or for whatever reason). Guess what! There are still more non-US companies who would hire the guy and increase their profits. This would make our original US company uncompetitive with 3 times higher labour costs and would be forced to lay off a whole lot more US engineers in their bid to lower costs. So this "choice" does not end up benefitting anyone (the company, the US employees or the shareholders). Thus, eventually, the market would gravitate to the best cost-value tradeoff, and protectionism is a short sighted non-solution at best.
Outsourcing is killing our country.
Sending our jobs to India for cheap labor will kill our country in the long run. America is being sold out for profits by our own CEO's. Mark my words this will be the great downfall of the USA. The USA always had the best and the brightest but at this rate things will change forever…
For the worst
We have to start boycotting goods and services from companies that are outsourcing American jobs to other countries.
As a starter I am cancelling my Verizon DSL and landline, since they are oursourcing most of their IT work to India. Let's see if these human imports can generate similar demand and in turn revenue for Verizon services.
Such companies want to have their cake and eat it too !
They don't get it that if they do not hire locally, the demand for their goods and services is only going to decline. These companies have to step up and stop this vicious cycle. Think long term and not short term gains.
"Secondly, India is a market to GMs Chevrolet, Ford’s Ikon, Apple’s iPhone, HP’s PC, Oracle’s database, MAC’s burger, KFC’s Chicken…the list can go long and long.
Companies that sell their products in India in some way give back to society, creation of jobs is one of the ways to give back to society.
"
Hmm. A US job loss vs. 1 iPhone sales? India is a market for American products does not necessarily mean it is providing jobs for Americans does it? Also, only the well off are able to buy American goods there. Most of the country are poor, so only the ones that are taking US jobs can really afford US goods right? But, in reality, most of the ones that are taking US jobs are investing in real estates and housing to build up their wealth, not US products….
So, why do we bother shipping jobs over there? There are tons of IT and US engineers that are continually being laid off in the US inorder to keep their H1-B counterpart, many time chosen by Indian managers….
So, don't try to pain a pretty picture as though India is saving US's economy. When the exact opposite is true. It is sucking the wealth and GDP out of the US economy. It has been for the last 10 years. Only now some of the mainstream media is starting to open up their eyes to this realization. When some of us had already predicted thsi would happen back 10 years ago…
well we're still exporting dollars by exporting work – so maybe we should be a bit nore conservative in that arena as well.
An Indian again, Outsourcing from US has began in 1970s, spread to Taiwan, South Korea and China. The trade gap between China and US are much, much wider. Outsourcing to India started only few years back, and the work is balanced between US and INDIA for strategic reasons, it is not 100% outsourced.
Americans shot themselves by pumping their money into Oil market. They exported dollars and imported problems. Oil went up and then came down because of technical reasons not fundamental reasons.
Americans can still pioneer in the field of IT/Transport. By designing Electric cars and exporting to countries around the world, they can create lot of jobs and revenues and save the billions of dollars spent on Oil.
Come on Americans, I always admire the US and the people. You had led world from all fronts. Stop cribbing about jobs being shifted to India…there are new avenues open to explore and lead.
I am Indian. I can clearly understand the disappointment among Americans about jobs being shifted to India. But after the economy collapse, neither the DOMESTIC nor the MNCs are hiring.
Secondly, India is a market to GMs Chevrolet, Ford's Ikon, Apple's iPhone, HP's PC, Oracle's database, MAC's burger, KFC's Chicken…the list can go long and long.
Companies that sell their products in India in some way give back to society, creation of jobs is one of the ways to give back to society.
If an American company generates revenues from US but uses India as a manufacturing base, then I would fault the attitude of CEOs.
The layoff was twice the stated amount. Cisco has already outsourced 1,000 jobs to India with plans to increase to 3,000. Who does the US Government think is going to pay income taxes and support them when many of us have no incomes due to outsourcing. It is no wonder that there is no Company loyalty. They want you to give your all and then they kick you to the curb.
"thinker"
I clearly understand the ramifications of outsourcing (re-read my earlier post). My guess is that it has benefited you more than me considering the direction of the job movement. Increasing profits for a corporation does not necessarily mean that the economy in which the headquarters is based, benefits. Those profits need to be invested somewhere in return.
Sure, boycott American companies – what is an American company, or an EU company, or Aisan company these days, anyway? Just the headquarters location? Seriously, what a stupid statement. When there was a flap about the French a while back, folks said to boycott French companies. Well, the French own a bunch of large American hotel chains. Wouldn't that be stupid to push fellow Americans into unemployment. Go back and read my earlier post responding to Middle. Like I said, it's a bit more complex.
You head off on a tangent and talk about American arrogance (while giving a list of Indian Americans and accuse me of pointing fingers at Indians). Yes, immigration is one of the reasons why America is (still) successful. Yes, Americans did help poke a whole in the ozone – now why should China, India, etc. do the same and not learn from another's mistakes and compound the misery for all?
You are most correct – survival of the fittest. I can't wait for the salary and cost-of-living scales to be even, then the fittest will compete on even ground. In the meantime, I'm happy to receive your finger-pointing. Or better yet, take the risk and come and compete now alongside my Indian friends and I here in the States. You'll understand the other side of the out-sourcing scenario more clearly to your personal economy.